{"id":11311,"date":"2021-02-20T13:42:51","date_gmt":"2021-02-20T19:42:51","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=11311"},"modified":"2021-02-20T13:43:31","modified_gmt":"2021-02-20T19:43:31","slug":"sp-500-weekly-earnings-update-how-has-q1-21-sp-500-eps-growth-changed-since-jan-1-21","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=11311","title":{"rendered":"SP 500 Weekly Earnings Update: How Has Q1 &#8217;21 SP 500 EPS Growth Changed Since Jan 1 &#8217;21 ?"},"content":{"rendered":"<p>At least unofficially anyway, Q4 &#8217;20&#8217;s earnings season is now over, with Walmart&#8217;s release of their fiscal Q4 &#8217;21 earnings last Thursday morning.<\/p>\n<p>400 of the SP 500 have now reported Q4 &#8217;20 earnings per IBES data by Refinitiv.<\/p>\n<p>Looking at the quarterly &#8220;bottom-up&#8221; data, Q4 &#8217;20&#8217;s SP 500 EPS estimate is now $42.56. This same estimate on 12\/31\/20 was $36.88 for a 4th quarter, 2020, &#8220;upside surprise&#8221; of 15.4%.<\/p>\n<p>Here is the 2020 history of &#8220;upside surprises&#8221; for the SP 500 EPS:<\/p>\n<ul>\n<li>q4 &#8217;20: +15.4% ( as of 2\/19\/21)<\/li>\n<li>Q3 &#8217;20: +19.6%<\/li>\n<li>Q2 &#8217;20: +22.9%<\/li>\n<li>Q1 &#8217;20: +2.6%<\/li>\n<\/ul>\n<p>The typical upside surprise is usually anywhere between +2% and +5%.<\/p>\n<p>I&#8217;ll say it again just to emphasize: the Street (i.e. sell-side analysts) dramatically underestimated the ability of American companies to generate EPS and revenue growth with the pandemic.<\/p>\n<p>How has Q1 &#8217;21 SP 500 sector growth rates changed since Jan 1 &#8217;21 ?<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/Refinitivq121asof21921.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11313\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/Refinitivq121asof21921-300x156.png\" alt=\"\" width=\"300\" height=\"156\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/Refinitivq121asof21921-300x156.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/Refinitivq121asof21921-150x78.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/Refinitivq121asof21921.png 530w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Just for grins, here is Q2 &#8217;20 too:<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/refinitivq221asof21921.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11314\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/refinitivq221asof21921-300x124.png\" alt=\"\" width=\"300\" height=\"124\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/refinitivq221asof21921-300x124.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/refinitivq221asof21921-150x62.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/refinitivq221asof21921-768x318.png 768w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/refinitivq221asof21921.png 815w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>The key takeaway for readers is that in &#8220;normal&#8221; years, the trend is typically negative revisions the last 90 days prior to a quarter&#8217;s earnings release and then the numbers typically get taken higher after seeing actual results.<\/p>\n<p>It&#8217;s a net positive for the SP 500 that we are seeing higher EPS revisions today in terms of expected y\/y SP 500 EPS growth prior to the quarter.<\/p>\n<p>The fact that Q1 &#8217;21&#8217;s &#8220;expected&#8221; SP 500 EPS growth has risen to +21.1% from +16% as of Jan 1 &#8217;21, and that for Q2 &#8217;21, &#8220;expected&#8221; SP 500 EPS growth has risen from 45.7% to 50.3% is a plus for the overall market.<\/p>\n<p>It&#8217;s telling us sell-side analysts are pulling numbers higher as the quarter draws closer.<\/p>\n<p>SP 500 Weekly data:<\/p>\n<ul>\n<li>The forward 4-quarter estimate rose to $173.68 this week, from last week&#8217;s $173.65, and versus 12\/31\/20&#8217;s $159.02.<\/li>\n<li>The PE ratio on the forward estimate this week is 22.5x<\/li>\n<li>The SP 500 earnings yield is 4.45% vs 4.42% last week and versus 4.23% on 12\/31\/20<\/li>\n<li>The &#8220;average, expected&#8221; SP 500 EPS growth for calendar 2020 and 2021 is 5%.<\/li>\n<\/ul>\n<p>The &#8220;rate-of-change&#8221; data:<\/p>\n<p><a href=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/fwdearningscurve21921.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-11317\" src=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/fwdearningscurve21921-300x285.png\" alt=\"\" width=\"300\" height=\"285\" srcset=\"https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/fwdearningscurve21921-300x285.png 300w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/fwdearningscurve21921-150x143.png 150w, https:\/\/fundamentalis.com\/wp-content\/uploads\/2021\/02\/fwdearningscurve21921.png 752w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Tracking a forward SP 500 EPS curve using the IBES data by Refinitiv, readers can see how the 4-week and 12-week rate of change continue to show decent strength.<\/p>\n<p>The bottom-up quarterly estimates won&#8217;t start for 2022 until late March, early April. &#8217;21 so we are still fling blind in terms of how the sell-side strategists and bottom-up analysts see the 4 quarters of 2022.<\/p>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>The fact that January &#8217;21&#8217;s SP 500 return was negative, tells me that the calendar year has the potential to be negative as well. As always is the case, sometimes you get a false signal. Strategist&#8217;s like Tom Lee at @Fundstrat are still bullish on the year, and Tom is quite good and notoriously right, typically.<\/p>\n<p>There is nothing in the SP 500 EPS forecasts yet that indicate a problem, but readers will see it in the market correction first typically before the numbers. The above SP 500 EPS data is NOT a market-timing tool. If anything the EPS data is a &#8220;coincident&#8221; indicator, with a leading aspect to the data.<\/p>\n<p>As always, take everything you read with a healthy skepticism, and invest based on your own financial risk and emotional profile.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>At least unofficially anyway, Q4 &#8217;20&#8217;s earnings season is now over, with Walmart&#8217;s release of their fiscal Q4 &#8217;21 earnings&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[262,91],"tags":[],"class_list":["post-11311","post","type-post","status-publish","format-standard","hentry","category-2021-sp-500-sector-growth-rates","category-weekly-earnings-update"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11311"}],"version-history":[{"count":5,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11311\/revisions"}],"predecessor-version":[{"id":11319,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11311\/revisions\/11319"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}